Powell triggers stock rebound, Trump says he's not bluffing on Mexico tariffs, and China ups pressure on the U.S. Rally time?Yesterday's more than 2% gain in the S&P 500 Index, driven by what was seen as a hint by Fed Chair Jerome Powell that the central bank may be moving in the direction of a rate cut, continued into Asia trading. The MSCI Asia Pacific Index climbed 1.1% while Japan's Topix index closed 2.1% higher, with all 33 industry groups in the gauge gaining. In Europe, the reaction was more subdued, with the Stoxx 600 Index adding 0.4% by 5:50 a.m. Eastern Time. S&P futures pointed to more green at the open, the 10-year Treasury yield was at 2.123% and gold added to its recent rise. Not bluffingPresident Donald Trump warned on Twitter that he's not "bluffing" in his threat to impose 5% tariffs on goods from Mexico, even as opposition to the move grows among Republican lawmakers. Later today, Mexican Foreign Minister Marcelo Ebrard is meeting officials at the White House in an attempt to find a way to appease the president. Markets are betting that some progress can be made, and the Mexican peso was the world's best-performing major currency yesterday. Trump will not attend the meeting as he's visiting a golf course in Ireland. China targetCommerce Secretary Wilbur Ross said the U.S. would take steps to ensure it doesn't get cut off from supplies of rare earth minerals after China's state planner said in a statement yesterday it is studying whether to impose export controls on the materials. In another sign of the rising tensions between the two nations, China seems to be targeting U.S. corporate interests in the country, with authorities fining Ford Motor Co.'s main joint venture $23.6 million for antitrust violations. Elsewhere on the geopolitical front, Trump warned that there is "always a chance" of war with Iran. PMI revisionsThere was some comfort in the final May PMI data for the euro area this morning when the composite reading was revised slightly higher to 51.8, although manufacturing continues to be a drag on growth prospects. Markit warned that the U.K. economy remains close to stagnation as Brexit uncertainty adds to the worsening global growth outlook for businesses in the country. Final May services and composite PMIs for the U.S. are due at 9:45 a.m. Coming up…Ahead of Friday's payrolls data we get the ADP employment change at 8:15 a.m. ISM non-manufacturing is at 10:00 a.m., and crude oil inventories land at 10:30 a.m. Following Powell yesterday, we hear from Fed Vice Chairman Richard Clarida, Federal Reserve Bank of Atlanta President Raphael Bostic and Fed Governor Michelle Bowman. The beige book is at 2:00 p.m. And the U.S. Securities and Exchange Commission is expected to approve new conflict-of-interest rules for brokers, requiring them to act in the "best interest" of clients. What we've been readingThis is what's caught our eye over the last 24 hours. And finally, here's what Joe's interested in this morningStocks surged yesterday after a speech from Fed Chairman Jay Powell was interpreted as being dovish, even though - as Bloomberg Opinion's Brian Chappatta points out - he didn't actually say anything about rate cuts. So what made the bulls so happy? To understand things it's worth going back to last December's Fed meeting. By the time of that hike, stocks had already fallen close to 10%, and interest rate-sensitive sectors of the economy like housing and cars had been showing weakness for months. And yet they went and raised rates anyway. The hike felt very inertial, like it was a follow-through from past commitments, as opposed to being in-touch with way the risks were skewing at that moment. What was important yesterday was that right at the top of the speech Powell acknowledged risks emanating from the trade war. As Tim Duy notes, the paragraph looked like a last-minute addition. The interpretation is that, unlike in December, the Fed is closely monitoring the situation right now and isn't going to make decisions due to its own momentum. If conditions call for a rate cut, policy makers appear ready to act.  Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Before it's here, it's on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can't find anywhere else. Learn more. | 
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